How APACPAY Can Unlock the Exploding Latin American Market

November 2914:412017

The Enormous Power of the Latin American Market is UnderappreciatedLatin America represents a massive population of more than 639 million people, with a nominal GDP of $5.5 trillion. Despite its size, several technical and regulatory difficulties have discouraged international E-Commerce companies from approaching the market, causing it to become chronically underutilised. APACPAY offers an integrated solution that addresses these problems on a regional level, greatly reducing the difficulties involved in selling online to the Latin American market.

Act Fast Before Growth in Latin American E-Commerce ExplodesThere is a convergence of factors that could result in a sudden explosion in the Latin American E-Commerce markets. As we have seen from the example of Amazon, Netflix and E-bay, online sellers quickly monopolize the market in their particular niches, pushing out the competition. Therefore, there is a great opportunity to get into the Latin American markets before competitors are deeply established. To achieve a fast rollout in the Latin American market, a ready-made solution like APACPAY that works ‘right out of the box’ is required. Because we have already determined the specific difficulties with online payments in different regions, we have been able to design a multi-pronged approach that can immediately unlock a large percentage of the market.

Growth has started to Accelerate, and will be Exploding by 2019The E-commerce industry in Latin America turns over about $60 billion dollars annually, attracting customers from a global market. Out of all of the Latin American countries, Brazil has the highest E-commerce revenues at $25 billion per year, which is the 10th largest globally. Mexico is also catching up, with an annual growth in online revenue of 20% forecasted in 2018 and 2019.The widespread adoption of the smartphone, internet and social media in Latin America, combined with the increasing maturity of E-Commerce vendors, make investments in this area highly valuable. International online merchants have not yet succeeded in penetrating and saturating the local market, meaning that this market is still ripe for the picking.

APACPAY Solves Consumer Scepticism towards E-CommerceThe first consumer marketplace (like an equivalent of EBay) to become successful is called MercadoLibre. The platform allows the public to buy and sell their goods, usually new or used consumer appliances like gaming consoles or bikes. When they started out, payment was offline, with no protections for buyers or sellers. Other even more unreliable services copied MercadoLibre’s model, leading consumers to view E-Commerce as an undependable system. The overall appearance of E-Commerce systems as unofficial and untrustworthy has become a continual obstacle to consumer adoption. Because of the wide array of companies that come and go from the E-Commerce segment, consumers never have the opportunity to build their trust in a company. APACPAY aims to remedy this problem by providing a trustworthy and reliable payment solution that stays consistent across the many online retailers they might choose to shop with. In this way, even if they are dealing with an unfamiliar retailer, they can put their trust in the well-known APACPAY payment system.

Difficulties in the Latin American MarketLimited buying habits, and restricted access to credit cards have contributed to the difficulty in marketing to this largely untapped region. In addition, Latin America is made up of more than 30 different financial regions, each with their own banking structures and regulations. Volatility in the exchange rates, economic performance and regulations of these countries further complicate the issue. These factors make entering the market in countries like Brazil and Argentina a daunting task.The purpose of this report is to convince the reader not to be deterred by the difficulties that turn other companies away from Latin American E-Commerce, and to reap the rewards of massive growth in these immature markets. The important thing to understand is that Latin America is very unique because as of yet it is not able to be targeted by a cross-border system using international credit card networks. Instead, individual local areas need to be targeted using specific platforms. This task is more difficult than it might seem, because 95% of the country’s E-Commerce spend is accounted for by the top seven countries. Brazil and Mexico account for about 60% of the E-Commerce market, meaning that a large portion of the market could be targeted accessing a few different platforms.

E-Commerce Success StoriesDespite these obstacles, Latin Americans are still learning to buy online. Amazon, PayPal and eBay were the first to deliver a good shopping experience online, and the market is learning from their example. Brazil now has a score of new local e-commerce players, including Submarino, Netshoes and Magazine Luisa. Several of the big department stores such as Ripley and Falabella in Chile and Liverpool and Palacious de Hierro from Mexico have set up online shopping platforms. MercadoLibre and their competitor, Linio are also continuing to improve their services. The E-Commerce market is improving and consumer’s appetite for online shopping is increasing along with it.Spotify, Uber and Netflix are all doing a good job of helping consumer learn how to buy on their mobile devices. Demographic and technology adoption statistics support an imminent increase the E-Commerce user base. More than 50% of people aged 15-65 have a smartphone, with more than 200 million smartphones in total. This number is predicted to reach 250 million by 2019. Latin America also has an unusually young population, with 80% of the population being between 18 and 40 years old. 85% of the young, urban consumers living in Mexico own a smartphone. 20 million live in Columbia and around 75% own a smartphone. Latin Americans who do not yet have internet access are increasingly likely to get it over the next few years. This means that the market demand for E-Commerce is set to explode, with especially big opportunities available for retailers whose services can be delivered to a mobile device. This is because mobile internet browsing time exceeded other kinds of internet browsing in 2016. In 2017, one quarter of E-Commerce sales occurred on a mobile device. By 2022, this percentage will be more than 50%.These statistics indicate that the Latin American people might become some of the most enthusiastic consumers of online retail in the world when they are given easy-to-use and functional shopping platforms. Developing online retail platforms that work to solve consumer scepticism, as well as the technical and regulatory issues that prevent Latin Americans from becoming enthusiastic online consumers is of utmost important to E-Commerce companies looking to get into the Latin American market. As we have demonstrated APACPAY is the ideal payments solution for rapidly developing such a platform, which brings us to our next question.

What is APACPAY?APACPAY is the premier E-Commerce payment service in the developing world. They currently have a network of partners stretching through Argentina, Brazil, Mexico and several other countries, allowing them to offer comprehensive online payment methods in these areas.In Mexico, for example, they offer all the major payment methods including:• Cash• Domestic internet banking transfer• International and domestic credit cardsWe will now explain how these payment methods can be used for a vast majority of E-Commerce transactions.

CashWith Mexico still being largely a cash economy, 34% of E-Commerce payments in the country are made by cash. This is made possible by OXXO, who are a chain of 14,000 convenience stores across Mexico who accept cash payments for E-Commerce transactions over the counter. The store attendant will ask for the customer’s ‘transaction reference number’, and will provide the customer with a voucher code that will pay for the transaction using the store’s online credit.This method is very secure because the cash is taken upfront, and there is no opportunity for dispute. However, there are issues that turn many customers away from this method, including increased processing time on their transaction, resulting in slower delivery of their purchase.

Local and International Credit CardsThe two major credit card companies Visa and MasterCard both operate in Mexico. However, there are differences in what can be done with a ‘locally issued’ versus an ‘internationally issued’ card.Locally issued cards cannot be used for international online purchases, such as from AliExpress or Amazon. Cardholders do not understand that this is the case, and try to use their locally issued cards anyway, resulting in poor conversion rates for international E-Commerce websites.Internationally issued cards are accepted in international online transactions, however most people do not meet the qualifying criteria to get one of these cards. Usually, only high-income earners can obtain an internationally issued card. With about one in seven cards in the country being internationally issued, about 85% of card holders have no access to the international market.

Domestic Internet Bank TransfersSistema de Pago Electrónico Interbancario, or SPEI is a system developed by the Bank of Mexico to allow the public to make nearly instantaneous deposits into bank accounts. Other domestic internet transfer services provided directly by the banksinclude Banamex and Bancomer, which are aimed at allowing bank transfers to merchants.

APACPAY’s SolutionAPACPAY offers all three of the payment methods above within a single, integrated system with competitive rates.We pride ourselves on helping the diverse Latin American market to achieve the same ease of access to E-Commerce that many other first world countries enjoy. We have a team of specialists in different areas such as optimizing approval rates and fraud management, who are dedicated to assisting your business as you begin to penetrate the promising Latin American market.